The future of the branch is a topic that invites much discussion as financial institutions shift focus and resources to their digital channels. Financial institutions of all types are responding to pressures on the branch model by harnessing technology and by thinking more creatively about their physical distribution strategies.
At Datos Insights, we’ve recently published our latest research into banks’ branch strategies, outlining how banks are transforming their networks by changing formats, redefining staff roles and leveraging technology to optimise operations. Here are some of our key findings:
Banks focus on optimising branch processes as customer demand for cash continues
Handling cash is a time-consuming business. Yet, cash is resilient despite the rise in digital payments. Recent research from UK Finance demonstrates that in the current cost of living crisis, an increasing number of people are turning to cash to manage their day-to-day spending. Business customers, in particular, are still highly reliant on bank branches for cash services. Banks are, therefore, looking carefully at their cash automation strategies and seeking ways to optimise operations.
Technology can help in this regard. Teller cash recyclers (TCRs)—secure devices used by branch staff for storing cash and handling customer withdrawals and deposits—are increasingly being adopted by banks across the world. Our research shows that banks across the globe value TCRs because they improve branch operations, allowing for greater efficiencies in cash handling. TCRs also enable branch redesign to a more open-plan format. Upskilled tellers can then transition to ‘universal banker’ roles, which improves branch profitability and overall customer experience.
Assisted self-service terminals free up the teller whilst keeping the human touch
When it comes to business efficiencies and streamlining operations, self-service can appear to be the panacea for banks. Self-service can improve the customer experience if routine tasks can be carried out efficiently and in a timelier manner. However, self-service can also lead to dissatisfaction if customers feel they have been abandoned and left to cope on their own if something goes wrong. Adding an ‘assisted’ element to self-service terminals can bridge the gap between teller services and the ATM, thereby improving the customer experience. Assistance for more complex transactions can be “in-person” from branch staff equipped with a special tablet or from remote staff via video link.
Countries such as Saudi Arabia and the U.S. are adopting video assisted self-service terminals (ASSTs), known by various names such as ITMs or VTMs. Using a video ASST, the customer and the teller can communicate in real time; the video teller can guide the customer through the transaction or, in some cases, operate the ATM remotely. According to our Global Branch Transformation research, the number of video ASSTs across the globe has more than doubled over the last five years.
Video terminals extend branch services beyond traditional hours and locations
Financial institutions of all sizes are deploying ASSTs to migrate transactions away from the teller line and extend their geographic reach and service hours. By employing video tellers who speak different languages, banks can leverage video ASSTs to increase access and financial inclusion amongst marginalised communities. Many video ASSTs are in drive-through lanes, and some are off-site in hospitals or convenience stores, providing branch services in locations where a brick-and-mortar branch would not be viable. Some financial institutions report that only 1% to 2% of transactions at their video ASSTs are video teller-assisted but that customers appreciate that the support is there if it is needed.
Despite the ongoing digitalisation of services, branches remain an important distribution channel. Branches remain the dominant channel in almost all countries for account opening for simple and complex products. They are a symbol of trust, foster brand image and help maintain relationships with customers. In short, as brick-and-mortar locations aren’t going away, banks must transform their branches so they can survive and thrive in the digital era.
Featuring robust data and insightful commentary across 20 countries, we explore in depth the trends and opportunities in branch strategy in our comprehensive Global Branch Transformation study. Learn more about the full coverage and deliverables available here. For more information, please email me at [email protected].
